Beleaguered Lumber Liquidators announced on Thursday that CEO Robert Lynch was leaving and the stock is crashing in premarket trading. The company’s statement said founder and chairman Tom Sullivan has been tapped as the interim CEO while the home product retailer searches for a new chief exec.
The firm also announced that John M. Presley, the lead independent director on the board, has been appointed as the non-executive chairman of the board of directors. The LL board of directors also accepted Lynch’s resignation as a director of the firm.
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Shares of Lumber Liquidators were off more than 20% in early trading Thursday.
Statement from new CEO
Founder and new chief executive Tom Sullivan said, “I am really proud of the LL Team and I look forward to working with them and providing our customers with the best hardwood floors at the best prices as we have since I founded the Company over 20 years ago.”
Lumber Liquidators formaldehyde controversy
Lumber Liquidators has lost more than 60% of its stock value so far this year largely due to allegations that its flooring products from China contain a high level of formaldehyde.
The U.S. Consumer Product and Safety Commission confirmed it was investigating Lumber Liquidators’ after a 60 Minutes story highlighted that its products failed a number of tests regarding formaldehyde levels.
A few weeks ago, Lumber Liquidators announced it would stop sales of laminate flooring products from China. The firm also hired a former FBB director to review its sourcing procedures. The hardwood flooring retailer had been defending its flooring products from China as “completely safe” and said that its suppliers met California standards.
The company also disclosed that the Department of Justice is planning to file criminal charges related to the ongoing investigation of its products. The firm also noted it could see as much as $10 million in potential losses.